Standing Committee B

[Mr. John McWilliam in the Chair]

Finance Bill

(Except Clauses 1, 4, 5, 9, 14, 22, 42, 56, 57, 124, 130 to 135, 138, 139, 148 and 184 and Schedules 5, 6, 19 and 25, and any new Clauses and Schedules tabled by Friday 9th May 2003 relating to excise duty on spirits or R&D tax credits for oil exploration.)

Gerry Sutcliffe: I beg to move,
That the Order of the Committee of 15th May 2003 shall be amended by the insertion at the end of paragraph (1) of the words ''and on Thursday 5th June when it shall meet only at 8.55 am''
 We intend to amend further the Committee's sittings by agreement. I am happy that negotiations with my opposite number, the hon. Member for Spelthorne (Mr. Wilshire), have been fruitful and that we are moving towards a smooth running of the Committee and its business.

David Wilshire: I am grateful to my opposite number, the hon. Member for Bradford, South (Mr. Sutcliffe), for ensuring that the discussions are friendly and helpful. We are seeking to co-operate as best we can.
 However, I must again take a moment or two of the Committee's time to remind hon. Members that Her Majesty's Opposition are implacably opposed in principle to this method of doing business. We have objected to the practice of guillotining everything, but I shall not waste the Committee's time by rehearsing the arguments. I simply place on record the fact that the arguments are still valid. 
 I again place on the record the fact that we also object to the detailed and rushed way of considering a Finance Bill with knives. If the Committee so wishes I shall elaborate on that. However, the motion that is before us is to allow the Chief Secretary to vote against the euro this afternoon in the Cabinet. Provided that he votes in the correct fashion, we are happy to make it possible for him to attend the Cabinet meeting. 
 I want to mention another issue, so that I can put on the record our thanks to the Government. The programme motion that was changed last night on the Floor of the House not only took account of the sitting that we are losing this afternoon, but gave effect to the agreement that we reached to have a further sitting. Two extra sittings were agreed last night, and we appreciate that. We still need to discuss when we use those extra sittings. Do they come before or after a knife? Discussions are still taking place on that, and I have no doubt that we shall reach agreement. 
 Finally, I take this opportunity to make it clear that Her Majesty's Opposition are more than willing to co-operate as far as they can with the consideration of the Bill. To that end, I hope that we have shown thus far that we are not wasting time for the sake of it. We shall do justice to every clause. We are trying not to waste 
 time, but we are not prepared to rush just to meet an artificially imposed timetable.

John Burnett: While we also welcome the net gain in sittings, anyone who has sat in the Committee for even one sitting will realise that there is a phenomenal amount of work to do and, regrettably, a phenomenal amount yet to do that has not been published. There is an enormous amount of work on the Bill, and there has been insufficient time in which to do it. That is to be regretted. Although there is a net gain and we are slightly better off, that does not alter our objections to the way in which the Bill has been handled and the fact that sufficient time has not been allowed for the scrutiny of this complex, difficult and what should be a time-consuming Bill.

Gerry Sutcliffe: I shall respond briefly to what has been said. I do not want to undo our fruitful and friendly negotiations, but I must refer to the fact that we are not trying to rush things. Anyone who witnessed the Committee's proceedings the other day saw two and a half hours being spent on three clauses, although I admit they were important clauses. However, we do not want to argue about that. We are trying to be as accommodating as possible, given the seriousness of the Bill. My right hon. Friend the Chief Secretary and his team are doing their level best to ensure that every clause is given due scrutiny. I have no doubt that the Committee will be able to meet its timetable with good speed.
 Question put and agreed to.

Schedule 4 - Stamp duty land tax: chargeable consideration

Amendment proposed [3 June]: No. 6, [Mr. Prisk] in 
schedule 4, page 160, leave out lines 11 to 13. 
 Question again proposed, That the amendment be made.

John McWilliam: I remind the Committee that with this we are discussing the following:
 Amendment No. 188, in 
schedule 4, page 160, line 20, leave out 'grant or surrender' and insert 'grant, surrender or assignment'.
 Amendment No. 189, in 
schedule 4, page 160, line 24, at end insert— 
 '(ab) in relation to the assignment of a lease, a premium moving from the assignor to the assignee,''.'.

Paul Boateng: May I say what a pleasure it is to be chaired by you, Mr. McWilliam? We all look forward to serving under you.
 Before I come to the substance of the amendments, I cannot help but comment on the bizarre explanation for the Committee's decision not to sit this afternoon tendered by the hon. Member for Spelthorne, who speculated as to my actions in Cabinet. His speculation was so lurid as to suggest that the happy faces on his tie may denote more than simply a happy disposition. Perhaps they have some other significance, because 
 they are fantastic in the extreme, and I am not talking about the happy faces—

John McWilliam: Order. While we are discussing hon. Members' sartorial elegance, may I say that gentlemen may remove their jackets, as it is somewhat warm this morning?

Paul Boateng: We are grateful to you, Mr. McWilliam, but I must return to the amendments.

David Wilshire: To put the Chief Secretary out of his misery, I should tell him that I wear ties like this to remind me not to take myself too seriously.

Paul Boateng: I can only say that there was never any danger of us doing that. I am gently pulling the hon. Gentleman's leg, because we are all very fond of him.
 I am grateful for the opportunity to make an early response to the amendments, as I may be able to move matters along. At the end of Tuesday afternoon's sitting the hon. Member for Hertford and Stortford (Mr. Prisk) was speaking to three amendments to schedule 4, amendments Nos. 6, 188 and 189. It may save the Committee some time if I make my comments now and give the hon. Gentleman and other members of the Committee some good news. I shall take amendments Nos. 188 and 189 first. 
 Paragraph 15 of the schedule provides that a reverse premium does not count as a chargeable consideration in relation to the grant or surrender of a lease. That means that if a landlord pays his tenant a premium to take or surrender—hand back—a lease, no stamp duty land tax is payable. The two amendments together seek to clarify that a reverse premium does not count as a chargeable consideration in relation to the assignment of a lease either. Therefore if, as I appreciate does happen, an assignor pays an assignee to take an assignment—a transfer—of a lease, no stamp duty land tax would be payable. We understand that these two amendments originate from the Law Society, and I take this opportunity to thank it for its representations since the publication of the Bill. 
 As the Bill expressly excludes reverse premiums on grants and surrenders, I can see the argument that it should expressly exclude reverse premiums on assignments as well. After all, a surrender is simply an assignment to a particular person—the landlord. Although it could be argued that we should simply clarify the matter on the record, in this instance it may be easier if I confirm that we are willing to accept amendments Nos. 188 and 189. I thank the Law Society and the hon. Member for Hertford and Stortford for bringing these matters to our attention. 
 Amendment No. 6 would extend exemption from stamp duty land tax on the surrender and re-grant of a lease in schedule 4(14). Paragraph 14 mirrors the current treatment of surrenders and re-grants under stamp duty, which limits the charge to ad valorem duty when an existing lease is merely replaced by a new lease of the same subject matter. The paragraph simply ensures that, as now, there is no additional charge to ad valorem duty on the market value of the lease 
 surrendered or granted. Any other consideration or rent payable under the new lease will, as now, be chargeable to lease duty in the usual way. 
 Sub-paragraphs 14 (b) and (c), which the Opposition seek to omit, ensure that under the new regime it is only leases of the same subject matter—of the same length and on the same or substantially the same terms—which qualify for exemption. That is not new. It reflects the current position in section 77(1) of the Stamp Act 1891. However, I am aware from the representations received that there are some wider points of detail surrounding the surrender and re-grant of leases, including the treatment of any premium or rental element. These issues are currently under discussion as part of the ongoing consultation on the lease duty proposals. I feel that that point could also be best taken up as part of that process, and that is our intention. 
 We are committed to ensuring that the legislation operates fairly and in such a way as to assist the flexibility of the business community, and I can assure the Committee that we will, of course, consider very carefully the wider issues raised as part of that ongoing consultation. Although I am not minded to accept Amendment No. 6 at this time, I undertake to the Committee that the point will not be lost. We will consult further on the wider points raised and, if necessary, return to them at a later date. Having accepted the two amendments and undertaken to reflect on the third, I hope that the Committee will accept amendments Nos. 188 and 189 and reject amendment No. 6.

Mark Prisk: I also welcome you to the Chair, Mr. McWilliam. We look forward to your firm and fair chairmanship in the coming hours. I am delighted that the Chief Secretary has begun on such a convivial note. I hope that it does not blunt his argumentative skills for this afternoon: I am sure that it will not.
 I am particularly pleased that amendments Nos. 188 and 189 have been considered carefully, and have been accepted by the Government. That is to be commended. On amendment No. 6, I welcome the general comments that the Chief Secretary has made, namely that the Government will consider the points that are raised in the amendment. I would say, however, that it is rather unsatisfactory for the Committee, and indeed the House as a whole, to be told that the matter will be dealt with by an outside process of consultation and not through the process of scrutiny, which should be the principal process by which the Bill is amended, corrected or changed in any way. However, given that the Chief Secretary has put on record that it is his intention to ensure that the point that lies in amendment No. 6 will be incorporated in those discussions and brought back to the House—presumably on Report—I am perfectly willing to withdraw amendment No. 6 in order that we can move on to other business and consider the schedule as a whole. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Amendments made: No. 188, in 
schedule 4, page 160, line 20, leave out 'grant or surrender' and insert 'grant, surrender or assignment'.
 No. 189, in 
schedule 4, page 160, line 24, at end insert— 
 '(ab) in relation to the assignment of a lease, a premium moving from the assignor to the assignee,''.'.—[Mr. Prisk.]
 Question proposed, That the schedule, as amended, be the fourth schedule to the Bill.

Mark Prisk: Amendment No. 5 was rejected, and amendment No. 6 was withdrawn, so we have a score draw on amendments to the schedule. However, I wish to consider the scope of the schedule, which is very important. Several matters that are of particular concern to those who will be affected by the tax have not been drawn out in the debates on the amendments.
 I draw the Committee's attention to paragraph 1(1): 
''The chargeable consideration for a transaction is, except as otherwise expressly provided, any consideration in money or money's worth given for the subject-matter of the transaction, directly or indirectly, by the purchaser or a person connected with him.''
 There is much concern about that all-encompassing description, which could lead to uncertainty, particularly in complex transactions. The Chief Secretary will tell us that the Government are consulting on the matter, but surely it must be better to consult first and then to establish a clear and acceptable definition that can be enacted by the House. The Government's attempt to run consultation and scrutiny in parallel perpetuates the prospect of misinterpretation and thus undermines their aims of reducing tax avoidance. 
 Paragraph 3 states: 
''The amount or value of the chargeable consideration for a transaction shall be determined without any discount for postponement of the right to receive it or any part of it.''
 The worry is that the paragraph fails to recognise that modern property practice includes delayed rights on a regular basis, whether considerations in rents, rights or easements. Is the Chief Secretary aware that an up-front approach to valuation is in direct contradiction to the discounted cash flow approach that is used to calculate tax payable? There is no attempt to include the discount in paragraph 3, yet it is included elsewhere in paragraph 5. That conflict in the valuation approach is unnecessary, and I would appreciate hearing the Chief Secretary's explanation of why two different approaches have been taken. We considered paragraph 5 earlier in the debate on clause 47, so I shall not detain the Committee further on that matter. 
 Paragraph 6 deals with partitions. Will the Chief Secretary provide a definition of partition or division? I may have missed it in the many interpretation clauses later in the Bill. The particular problem that I am thinking of is where there are joint interests in parcels of land that later form part of a single transaction. Will the Chief Secretary clarify exactly what the Government understand to be a partition or division?

John Burnett: Would the hon. Gentleman be interested to know, as I would, whether partition means a partition of a legal as well as an equitable interest in the land?

Mark Prisk: Indeed. The hon. Member for Torridge and West Devon (Mr. Burnett) hits the nail on the head. I hope that he has not given the Chief Secretary too much guidance. If the Chief Secretary follows that advice, it will keep him on his toes. I share the hon. Gentleman's interest in the definitions of partition and division.
 Paragraph 10 deals with the carrying out of works. Earlier, we debated amendment No. 187, which sought to clarify the meaning of the paragraph. I want to consider the effect in the marketplace of possible interpretations of it. Essentially, it reverses the position on carrying out of works to land and property that was previously established, particularly in the 1992 case of Prudential Assurance Co. Ltd. v. Commissioners of Inland Revenue. Without going into great detail, the essence of the case was that the Pru acquired a partly completed development from a third party seller. The seller agreed to carry out works for free or at a greatly reduced fee to complete the development that was under agreement. The court held that the works were not dutiable. 
 Paragraph 10 reverses that position. If we read the explanatory notes, we are none the wiser, which is a worrying omission. The change represented by the paragraph would have significant repercussions for many property developments. I fully appreciate that most members of the Committee will not burst into tears over the prospect of property developers struggling. However, we need to remember that property developments are people's homes or workplaces and represent significant costs for businesses. It is important to recognise the additional cost. 
 It is also important to recognise the serious problem of the practicality of implementing the paragraph. I believe that it will lead to much confusion. The Chief Secretary may have a different view and I would be glad to hear it. 
 There are some other problems. The inclusion in paragraph 11 of the provision of services means that facilities management companies or those who provide services to offices could fall within the definition. I cannot believe that the Government or the Inland Revenue intend that a serviced office provider that makes a wrapped-up charge to an occupier for support and secretarial services should fall within the definition. That cannot be logical. However, ''the provision of services'' could well include such things. I am sure that the Chief Secretary will want to clarify that point. 
 The confusion may be more awkward when it comes to the difference between repairs and maintenance. Paragraph 10(1) refers to other works that 
''enhance the value of land''.
 Yet in many service agreements, which reflect both immediate works to someone's property and maintenance programmes, how is the distinction to be made? 
 That leads on to another awkward question in relation to public-private partnerships and arrangements under the private finance initiative. How will the many hotel-style agreements, under which works on the maintenance of the building are integral to the transaction, operate? The Chief Secretary will be familiar with that because his office is in a building relating to that kind of arrangement. The Treasury has been through the process. I presume that he will be able to clarify how that kind of transaction will be separated and not be liable. Many private contractors will be worried that, as part of their costings for future PFI and PPP agreements, they could suddenly be drawn into the net. I trust that the Chief Secretary will be able to clarify that. 
 Finally, will the Chief Secretary explain the rationale behind basing the whole schedule on open-market value, rather than the cost of carrying out works? The hon. Member for Torridge and West Devon touched on that in an earlier debate. It is an important point and I was not entirely convinced by the Chief Secretary's reply. It is difficult to define the value of providing services and undertaking works. I would argue—as would many experts in the field of valuation, surveying and accountancy—that cost is a clearer definition, and is therefore, from the Government's point of view, easier to enforce. 
 The schedule contains a number of omissions and important uncertainties. I am sure that there will remain in many Members' minds genuine questions as to how the schedule would work in the real world.

Paul Boateng: May I begin by putting a significant point on the record? I do not want this to dog the substantial remainder of our consideration of SDLT. Let me explain our approach to consultation. The content of the schedule was largely set out in the clauses published at the time of the pre-Budget report. We did that quite deliberately in order that interested parties—the professional and business organisations—could reflect on the content's significance to their operations and advise accordingly. We received representations. They were fully considered and, when they were appropriate, taken on board.
 The suggestion that the provisions have been introduced in a hasty and ill-considered way does not bear examination. I know that that is the line taken by Opposition Members, and I respect that, but it must be understood that this is a new way of working. We are not handing down tablets of stone from on high and saying, ''There it is. Like it or lump it.'' We are trying to develop fiscal responses and reforms in a way that, even as we consider them, enables professions and businesses affected by our actions to make an input that reflects the thinking of the Committee and the legislature. That is entirely healthy and, instead of being repeatedly deprecated by Opposition Members, it should be embraced, because it provides an opportunity for them to have a real input into our deliberations, as I have demonstrated in accepting amendments Nos. 188 and 189. How different that is from the experience of those of us old enough to remember a Conservative 
 Administration. One would turn up and be berated for hours on end by the Financial Secretary, the Paymaster General or even, occasionally—a very long time ago—the Chief Secretary, and one would like it or lump it. That was all one could do. We, on the other hand, are opening up the process to realistic inputs from Opposition Members.

John Burnett: I think that the Chief Secretary has just told the Committee that consultation does not cease when consideration of the Finance Bill starts on the Floor of the House or in Committee. Perhaps he is exhorting us to do exactly what we are doing—making sure that the Bill is accurate, intelligible and properly amended and scrutinised. The hon. Member for Hertford and Stortford has given a useful and compelling resumé of the schedule. That is our job and that is what we are doing, but we have not had enough time to do it.

John McWilliam: Order. The point that the hon. Gentleman has made should have been made on the programme motion.
 While I am on my feet, it seems to me that there is an inadequacy in the programme motion that will probably require a Programming Sub-Committee meeting before we sit on Tuesday morning. Unless the last knife is moved back, there will be two sittings of the Committee with nothing to do, which seems to me totally illogical. I would have accepted a manuscript amendment, had hon. Members decided what they wanted to do, but, as they have not done so yet, it will have to be done on Tuesday morning. 
 However, I go back to my previous point. The hon. Member for Torridge and West Devon raises a point that should have been raised on the programme motion and not in this debate.

Paul Boateng: Thank you, Mr. McWilliam. Now perhaps I may turn to the detailed and important points raised by the hon. Member for Hertford and Stortford. [Hon. Members: ''At last.''] I wanted to make some general points first.
 The hon. Gentleman asked first why we discount rents and not some other consideration. Rental leases give rise to a range of issues in the context of a one-off transaction tax, as a series of rental payments is made over long periods. Discounting the value of rental payments, therefore, to net credit value captures the appropriate real value up front. That is the advantage of doing so. However, for other considerations—I think that the hon. Gentleman will agree that this is the right approach—the main principle must be that there should not be a discount for later payment. Therefore, the schedule recognises the difference between the two and reflects it appropriately.

Mark Prisk: Does the Chief Secretary recognise, however, that in that approach the Government are seeking an up-front payment on a consideration yet to be received, with the inevitable adverse consequences to a business's cash flow?

Paul Boateng: I do not accept that the consequences are necessarily inevitably adverse. Again, that depends on the nature of the transaction.
 As regards service offices, we do not intend to include the provision of services such as security and cleaning in a consideration. That area will be covered in guidance issued in the usual way in due course. I intend that it should be published in draft so that people will have an opportunity to comment on it because it is not our intention to catch service offices. 
 I want to make a general point on something that the hon. Gentleman raised almost as an aside, which was the implication that the Committee was somehow against property development. Nothing could be further from the truth. I do not think that there is single member of the Committee who does not welcome property development. It has a very important role to play in the economic regeneration and refurbishment of long neglected infrastructure in our country. We all welcome property development. 
 I have to tell the hon. Gentleman that his strictures might be better directed at some in his own party who seem to welcome property development in other people's constituencies, but not in their own. That message came out, and I did not want to make a point about it at the time, but I make the point now because the hon. Gentleman raised property development. When it comes to the building of homes, all our children will need homes. Therefore, a not-in-my-backyard approach is not appropriate at this time, and I can assure him that as far as our deliberations on the Bill are concerned, we are very much alert to the implications for property development and wish to ensure that there remains a healthy and flexible, responsive market in housing and property development. That particular canard can be put to rest. 
 The hon. Gentleman asked about the impact of schedule 4 on PFIs. As he can imagine, that is an issue of considerable interest and concern to me, not simply because of particular circumstances vis-à-vis the Treasury building, but because PFIs and PPPs have an important role to play in our investment and development of the country's infrastructure. There is active liaison between the Inland Revenue, Her Majesty's Treasury and external bodies led by the Construction Confederation, to which we are grateful for its input on all aspects of PFI. The hon. Member for Hertford and Stortford will be happy to hear that early indications are that the impact of the detail of the stamp duty land tax does not throw up many issues. Those issues that it does raise are under active consideration. Earlier this week, the Construction Confederation submitted written comments on the implications of the Bill for its members.

Michael Jack: I am listening with keen interest. The Chief Secretary will be aware that there are many ways in which PFI and PPP contracts can be structured, and their complexity can be considerable. Will the Chief Secretary assure me that once the dialogue to which he has just referred has concluded, the Treasury and the Revenue will publish a definitive statement of practice to guide those in the industry on how exactly the new tax impacts on such contracts?

Paul Boateng: That is an interesting request. The hon. Gentleman might like to refresh my memory about the extent to which he issued such guidance
 when he had the stewardship of such matters. I do not know, but I will make my own inquiries—though I suppose that would not really be proper. I will not make any inquiries. I hope that he can assure me that he issued such guidance. It is a very good idea. It had occurred to me, and the hon. Gentleman will be very glad to hear that it had also occurred to the Inland Revenue. We shall issue such guidance.

Michael Jack: If the Chief Secretary goes back to the Treasury annals in the public domain, as opposed to the parts that are not available to him, he will see that we issued copious guidance on how PFIs should be structured with a view to encouraging people to know precisely where they stood and how to go forward. I am glad that the Labour Government recognise a good thing and have embraced the very programmes that were under my stewardship when I was at the Treasury.

Paul Boateng: I hear what the right hon. Gentleman says and he has a bit of neck. It was my happy task as an Under-Secretary in the Department of Health to reflect on where PPP/PFI had got us when we came to office in 1997. There was not one new hospital.

John McWilliam: Order. Before the debate becomes too incestuous, may I direct the Minister to return to the schedule.

Paul Boateng: Yes, I shall not stray down that path, except to say that we shall issue guidance. We shall do so by way of updating the existing guidance on PFIs to reflect the SDLT measures. The right hon. Gentleman made a serious point, and it is important that those engaged in this area are fully aware of the impact of SDLT on their operations.
 Let me turn to the interesting point raised by the hon. Member for Hertford and Stortford about the definition of partition of a legal interest in land. I shall take him through the example that was drawn to my attention because that is probably the best way of explaining the definition. A and B are joint owners of two properties. They agree to split ownership, so that A is left as sole owner of one property and B sole owner of the other. That is an example of partition and will be familiar to a number of Committee members opposite and behind me. Paragraph 6 is a relieving provision that operates in such a situation, since paragraph 5 on exchanges, which we debated at length, could lead to a higher charge.

John Burnett: On a short point of clarification, will the Chief Secretary return to the point that I made to the hon. Member for Hertford and Stortford when I intervened on the disparity between legal and equitable interests? That point was straightforward, but if equality money is payable on partition, which sometimes happens, will the Chief Secretary confirm that it is subject to the usual bands of stamp duty only on the equality money?

Paul Boateng: I should like to come back to the hon. Gentleman on that because his question requires some reflection.
 Reference was made to the Prudential-IRC case and its impact on establishing that works were not 
 chargeable to stamp duty, and the impact of schedule 4 on whether it reverses that. The existing position relies on the use of documents and the structure of the transaction, and that is what we seek to address in these reforming clauses. We want to look at the substance rather than the form. Schedule 4 sets out a general principle that when works are not completed at the appropriate date and a purchaser is committed to using the vendor to perform those works, they are within the scope of the charge. That is the general principle, but if the purchaser has flexibility to choose who completes the task, it is right that that should not be included in the consideration, because it would be wrong to penalise someone simply because they were an effective provider of a particular service and happened to be chosen to perform it. As a matter of principle, what is important is whether there is discretion or flexibility in the exercise of a real and substantial choice. Again, the best way to explain it is that the substance rather than the form is considered.

Mark Prisk: I am grateful to the Chief Secretary for that explanation of the principle. My point was not about the rights and wrongs of the change—we could debate that at length—but that, regrettably, what he just said was not stated in the explanatory notes. Therefore, the change in the established law would be unknown to, or unseen by the outsider. Does he agree that that was an unfortunate omission?

Paul Boateng: That is the value of Committee—it is why we are here. If everything were in the explanatory notes, it would make the role of Opposition Members otiose. [Interruption.] I would not want to do that, even in the case of the hon. Member for Tatton (Mr. Osborne). I seek to give him some useful occupation with which to while away the hours.

George Osborne: When the Chief Secretary says that that is what he seeks to do, is he suggesting that the Government deliberately leave things out of the explanatory notes so that the Committee can discuss them?

Paul Boateng: I would not go that far, but the value of the Committee in the ordinary course of events over the years has been that it teases out matters that are not necessarily contained, for whatever reason, in the explanatory notes. Those people who pay attention to our deliberations—many do, because they have an interest in the subject matter—are pleasantly or unpleasantly surprised, as the case may be, as we elaborate upon matters. I hear what the hon. Member for Hertford and Stortford says. He has teased out the information and performed a useful function. Perhaps we might move on.
 Let me deal with the question that was touched on by the hon. Member for Torridge and West Devon about equality money. Clearly, he is concerned that the value of the property will also be taken into account in applying the SDLT rate bands to equality money. I can assure him that that is not the case. Only the equality money will be considered in calculating SDLT by reference to the rate bands. I hope that that gives him some assurance. 
 In the light of those detailed responses to what were properly detailed points, I hope that the Committee will give schedule 4 a fair wind and that we can continue with consideration of the remaining clauses. 
 Question put and agreed to. 
 Schedule 4, as amended, agreed to.

Clause 51 - Contingent, uncertain or unascertained consideration

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The clause deals with contingent, uncertain or unascertained consideration, the most obvious examples of which would be the variable or turnover rents paid by shops, bars and hotels. Therefore, the clause, which appears rather narrow, is actually of great concern to many businesses in our constituencies.
 The varying rents directly relate to the level of business that the enterprise achieves and reflect the widely fluctuating market within which such businesses operate. However, the clause also applies in other circumstances, such as a situation in which a landlord collects varying rents from several different tenants in a block; for example, that may occur in a shopping mall or an office block. 
 The contingency principle, as is recognised in the existing stamp duty, does cause problems. I welcome the fact that allowance has been made to enable those affected either to reclaim over-payments or to pay outstanding amounts at a later point, which we would welcome. 
 I would like to raise one or two concerns. Although we welcome the move from the description of best estimate to reasonable estimate—that is found on the last line of paragraph 2—will the Chief Secretary be more precise about the meaning of reasonable estimate in this context? We recognise the applicability of the terms ''contingent'' and ''uncertain'', but there is a real question about ''unascertained''. If a consideration is unascertained, how will it be estimated? When should that reasonable estimate be made? In matters of property, time is of the essence. It is assumed by many in the marketplace that the correct date will be what is termed elsewhere in the Bill as the effective date. I would appreciate it if the Chief Secretary would confirm that. If it is not, what is the date? Will he explain why, given the importance of the timing of the process, the term ''effective date'' is not included in the clause, because that would remove much uncertainty. 
 For multi-occupied properties, the clause will represent a significant administrative burden. If one thinks of a shopping mall of, for example, about 100 tenants, each with their own lease terms and their own rent review patterns, the clause would mean that occupiers would have to pay tax up front based on their reasonable estimate. Each would be subject to regular revision and new tax returns would be filed quarterly in some cases, and in some cases monthly. As rents changed, they would need to fill in new returns and correct their tax liabilities, then make applications 
 to reclaim the money that was not there. That is a huge burden, which also hits cash flow. 
 There is a combination of damage to cash flow for businesses, many of which are struggling at this stage in the economic cycle, and a heavy compliance burden for many small businesses that incur the tax. In conjunction with clause 80(4), the cost of reclaiming a rebate may cause a number of taxpayers to forego it. I was not entirely sure about that, but a number of professional bodies explained to me that the sheer complexity of the provision and the cost in management time for small businesses of having to go over that hurdle will be very significant. I hope that the Chief Secretary will comment on that. 
 One professional organisation, the Chartered Institute of Taxation, suggested a simpler approach, and I would like to describe it briefly to the Committee. The Inland Revenue should accept that the reasonable estimate is final at the taxpayers' option, leaving them to take the chance of not being able to ask for a refund. They would thereby be relieved of the administrative burden of filing regular returns. There may be some merit in that, and I hope that during the consultation process, which is outside our purview but running parallel to our discussions, the Government and the Chief Secretary will respond to that. I look forward to the Chief Secretary's reply.

John Burnett: I reiterate the point made by the hon. Member for Hertford and Stortford, which has also been drawn to my and the Committee's attention by the Law Society revenue law committee. The clause does not provide for the date on which the estimate should be made. We should know that; it is essential for the purposes of valuation that the due date is known. I hope that the Chief Secretary will assure us that the necessary amendment will be tabled on Report.
 Will the Chief Secretary confirm that the usual appeals processes apply in valuation matters? If the value cannot be agreed between the parties and the district valuer, an appeal is available to the Lands Tribunal. That is also important for taxpayers. 
Several hon. Members rose—

John McWilliam: Order. Before I call the next speaker, may I caution right hon. and hon. Members, as I did during an earlier sitting, about reiterating arguments. It is in order to say that one agrees with a previous argument, but reiterating it is not in order.

John Baron: Thank you, Mr. McWilliam. I welcome you to the Chair.
 Subsection (2) provides for the chargeable consideration to be determined on the basis of a reasonable estimate, which is fine. However, in practice it is likely to be difficult, if not impossible, for the purchaser to make any meaningful estimate of the amount of the further consideration that would be chargeable, especially when the further consideration may fall due many years after the transaction. The Committee should be concerned about the need to estimate unascertainable consideration on a reasonable basis. My hon. Friend the Member for 
 Hertford and Stortford made the valid point that if something cannot be ascertained, we doubt whether it can, in most cases, be estimated. I would appreciate the Chief Secretary's view on how to square that, because it seems to be a difficult problem. There is immense scope for disagreement about what estimate is reasonable in such circumstances. It may seem that we are playing with words, but the matter is important in the commercial world, and I would appreciate it if the Chief Secretary could address the point directly. It is difficult to estimate something that cannot be ascertained. 
 I want to stray a little, but not too far, Mr. McWilliam, and ask the Chief Secretary whether it would be in order for clause 90, which deals with an application to defer payment when there is contingent or uncertain consideration, to be widened to include any transaction to get round the issue and ensure that all transactions under clause 51 are widened or included to remove the uncertainty? I look forward to hearing the Chief Secretary's response.

Jonathan Djanogly: In dealing with contingent consideration, my hon. Friend the Member for Hertford and Stortford referred to rents attaching to turnover. In some cases, rents will be attached to profits. My hon. Friend referred to the clause applying to larger companies such as shopping malls as turnover clauses are often attached to rents. However, it also applies to small companies not only taking rents but taking leases in less prestigious locations, often when landlords cannot rent properties easily so they do a deal with a company that is moving in. That is a different concept from that to which my hon. Friend referred, and is particularly the case with start-up companies and companies with a single income—for example, from a licence—when there will be an estimable stream of income. The success of start-up companies cannot be ascertained on day one, and it will be very difficult to provide a valuation on which to base stamp duty. In addition, those companies will have the worst cash position, the tightest cash control and will be least able to risk putting out money in advance. Such companies look to deferring payments rather than paying up front. The provision will have implications for smaller companies, and, as such, it is a tax on enterprise that could have a significant impact on that sector.
 On the valuation mechanism, I noted that my hon. Friend mentioned that if the turnover or profits are not achieved, the tax can be paid back later. There is a cash-flow problem in that situation. If the stamp duty rebate is given later, will the interest that has been lost be paid back with the stamp duty?

Michael Jack: I have a simple question. Will the Chief Secretary tell the Committee what happens about SDLT when a consideration is dependent on a performance aspect of a business, the business fails and therefore no money passes between the user of the leased property and the provider?

Paul Boateng: The debate has been useful. The clause provides rules to enable taxpayers to establish a chargeable consideration for a land transaction when the consideration is unknown at the outset because the final amount remains to be paid. The amount could
 depend on a contingency, such as obtaining planning permission on the land, or it could be uncertain because it depends on some future event. It might not have been ascertained. The hon. Member for Huntingdon (Mr. Djanogly) made the point that it could depend on profits for an accounting period when the accounts are not yet finalised.
 As a transaction tax, SDLT needs rules that set out how the tax should be calculated when future events might affect the final amount of consideration to be paid. Under the clause, when contingencies affect the eventual amount of consideration, the purchaser may calculate the consideration on the basis that the amount that relates to the contingency will be payable. When the consideration is uncertain or still to be ascertained, the purchaser must make ''a reasonable estimate''—I will come to the definition of that—of the final consideration when the transaction takes place. 
 If it turns out that there is more or less tax to be paid, clause 80 provides for further payment or repayment of tax. In certain circumstances, clause 90 is relevant. The hon. Member for Billericay (Mr. Baron) referred to that. Clause 90 allows taxpayers to apply to the Inland Revenue to defer payment to tax. 
 Clause 51 provides a mechanism to allow taxpayers to pay the right amount at the right time. That is its purpose and what makes it so important to the consideration of this range of measures. 
 The hon. Member for Hertford and Stortford asked what is meant by ''reasonable estimate''. As is the case with self-assessment generally, it will be up to the taxpayer to supply the most appropriate estimate. The evidence that is appropriate to support the estimate will depend on the facts of the case. For a good reason, and to the great benefit of lawyers, the law always shies clear of defining ''reasonable''. In reality, a commercial tenant will usually have a good idea of the amount that they expect to pay over the term of the lease. There are business forecasts and management accounts, for example. The Revenue does not intend to challenge bona fide estimates, as long as they are reasonable, based on the facts available at the time. Issues that enable taxpayers to make a judgment will be laid out in guidance. 
 The hon. Member for Torridge and West Devon asked me to give an assurance about people who are dissatisfied. I am happy to do so. The normal appeals process will apply under the clause and it will be possible to make an appeal on the valuation to the Lands Tribunal. 
 As was mentioned, it is a concern to anyone who is running a business that there may be cash-flow problems if tax is paid in advance of paying the consideration. That is the inevitable consequence of SDLT being a transaction tax, but it does not differ from stamp duty. Businesses will be no more or less disadvantaged as a result of the measure than they would be under the existing rules, but, unlike stamp duty, they will be able to claim repayment if it transpires that they have overpaid. That is an 
 attractive element of the provision. The rules are designed to provide a workable and fair system for cases in which the amount is not clear at the outset, and if the transaction meets the criteria, application can be made for tax deferral.

Jonathan Djanogly: My understanding was that, if someone sold an asset with a contingent consideration, stamp duty would be payable on the ascertainable consideration and there would be a rebate. Of course, the difference is that in most cases people would get cash in their hands at the time of the transaction, which would mean that the deal had been done.

Paul Boateng: I do not think that that takes away from the central point that the measure is fair. It will be possible to claim a repayment, and businesses will not be unduly disadvantaged by anything introduced under the new system. If the criteria are met, there is an opportunity to apply for a tax deferral.
 The suggestion has been made that the tax is too complicated. That was the nub of the accusation by the hon. Member for Hertford and Stortford. This is complex legislation. It is bound to be complex, because of the number of different circumstances in which it may prove difficult to work out how much SDLT to pay at the outset. The legislation has to cater for them all. If it did not do that, there would be the dreaded lacunae, which the hon. Member for Torridge and West Devon would be only too ready to point out.

John Burnett: Will the Chief Secretary give way?

Paul Boateng: Perhaps a lacuna has opened up.

John Burnett: I hope that the Chief Secretary addresses the point that the Law Society, the hon. Member for Hertford and Stortford and I made about the trigger date for the tax, but I also ask him to reflect on the fact that valuation is an art, not a science. It is a double-edged sword for the taxpayer. If the figures are hugely wrong and far too much or too little tax is paid, what rights, if any, are there for the Inland Revenue stamp duty office or the taxpayer to put in a substituted value on ascertainment of the consideration?

Paul Boateng: The hon. Gentleman is absolutely right that valuation is an art rather than a science. That must be a great comfort to valuers, because they do not find themselves in danger of losing out to some mechanistic formula or calculating machine.

George Osborne: They are artists.

Paul Boateng: As the hon. Member for Tatton said, they are artists.

Stephen O'Brien: And artful.

Paul Boateng: And artful, as the hon. Gentleman says.

Jonathan Djanogly: Smaller companies are the ones that will hurt, as they will have to pay valuers to make the assessments in the first place. It is an important point. The Chief Secretary laughs off the impact of valuers, but they cost money. The implication of the clause is that small companies will have to pay for valuers as well.

Paul Boateng: I am not laughing it off. I was having a gentle dig at the hon. Member for Torridge and West Devon, but I certainly do not laugh it off. I shall deal in more detail in a moment with small companies, because the hon. Member for Huntingdon makes an interesting point that we shall need to consider in assessing the impact of the clause. It is hard to value future contingencies. The concern is that such valuations are based on an educated guess, involve many expensive assessments and a great deal of administration, and may not be cost effective.
 I understand those concerns, but any purchaser will have some idea of the amount that they expect to pay for land. For a commercial purchaser, that will inevitably be relevant to their business forecast. They need to make a reasonable estimate of the final amount that they will pay to work out how much to pay at the outset. In addition, the purchaser may apply to defer the payment of tax if they meet the conditions. It would not be reasonable to allow that to happen automatically, as the purchaser must show, as seems fair, that the amount of payment is uncertain and must work out when future payments will be due. 
 That applies to businesses of all sizes. How can a person who does not know how much the eventual consideration for a land transaction will be submit a return and pay their SDLT? That concern was raised by the hon. Member for Billericay. If the consideration for the land is not fixed at the time that a land transaction return and payment are due, there will be two ways to pay, which are outlined by the Revenue. The first way is by estimating the amount that will eventually be payable, and using that to calculate the tax due 30 days from the date of the transaction. If the maximum amount can be calculated at the outset, that should be the basis of the estimate. The amount must be adjusted later, if it proves to be too little, and a repayment can be claimed if too much tax has been paid.

George Osborne: This is a good moment for the Chief Secretary to address the point raised by my hon. Friend the Member for Huntingdon. If tax is overpaid, will the Inland Revenue pay interest on that tax when the rebate comes?

Paul Boateng: That is not the normal custom and practice, but in this case there is an argument for interest to be paid, and I would expect it to be paid when that problem occurs. I must keep going before I return to the general point made by the hon. Member for Huntingdon about smaller businesses.
 That is the first way to pay. The second is by applying to the Revenue to pay as and when the consideration is decided. If the Revenue does not accept the application, tax must be paid up front, based on the maximum of a reasonable estimate, and what I have just said applies. That does not apply to annuity payments. In such cases, 12 years' worth of payments will be used to calculate a single payment 30 days from the date of transaction, and there will be no further adjustment. We shall come to annuities in due course, but before anyone gets up to intervene, I think that we are right to alight on a 12-year payment in this 
 case. Survival could be longer or shorter, but 12 years represents the right balance—although I accept that it is a balance. 
 I turn to the point made by the hon. Member for Huntingdon. I want to reflect on that, and whether more needs be done in relation to small and medium-sized enterprises and the circumstances of start-ups. We have done more than has ever been done for those companies by raising the zero rate threshold to £150,000 for commercial and mixed-use property, as we propose to do in relation to lease duty. That is a major change because a significant proportion of those businesses will no longer be subject to SDLT at all. 
 I do not think that we can escape the fact that valuation is a normal tax process, and it is important for anyone starting a business to keep that in mind. SDLT is not the only reason that a small business would need to value its assets; there are others. That is no different from existing stamp duty, which any person starting a small business would have to bear in mind, except that the new £150,000 limit means that significant numbers of small businesses are not within the charge. 
 The Government have put in place a range of measures to support and encourage small businesses starting up in disadvantaged areas. It would not be in order to go into that, but it is safe to say that it is important that all Committee members are vigilant about the impact of all measures on small and medium-sized enterprises. Those are precisely the sort of business start-ups that we want to see. In being vigilant on their behalf, it would be quite wrong to exempt them from the usual disciplines of starting up a business. We have made a major step forward with respect to the zero rate threshold.

Mark Prisk: I share the Chief Secretary's view on the importance of small businesses. However, I am bemused by what he is saying now and what he said earlier. He has now admitted that the arrangements are complex and difficult—those are the words he used—and yet his own partial regulatory impact assessment says that the proposal will simplify things. Which view is correct?

Paul Boateng: I do not want to labour the point, but overall this is a modernising measure, the impact of which is such as to simplify very complex areas. The complexity of those areas has been used for the mischief of avoidance. That is the general message, and this is a valuable reforming measure.

Mark Prisk: Simple or complex? It cannot be both.

Paul Boateng: It can. [Interruption.] I shall not respond to points mumbled or muttered from a sedentary position. I would simply say that we should not kid ourselves, because in the real world of legislation some aspects are complex. They are complex for us, whose job it is to consider such matters, because we are dealing with complex areas. The rules are simple enough, but the area is complex. The two aspects together make for complexity. I would have thought that that was self-evident. I take the point that the hon. Gentleman makes, and I know its motivation, but it is not worthy of him. If we are to consider such matters seriously, we need to accept that
 some areas are complex and require our particular attention. Even though we seek to make the rules simplicity itself, it does not help matters to deny the complexity of the subject matter with which we are dealing.

George Osborne: On this complex subject, my right hon. Friend the Member for Fylde (Mr. Jack), who is not in his place at the moment, raised a point about what happens when a company goes bust or a business fails. Perhaps the Chief Secretary would answer that point, which was interesting and concerns a situation that would arise quite often.

Paul Boateng: It is an interesting point. When consideration depends on performance and a business fails, so no money changes hands, the outcome depends on a number of different scenarios. If nothing further is to be paid, but the purchaser has paid up front on an estimate, it seems reasonable that they should be able to claim a repayment with interest. Indeed, that is the case. If, however, Opposition Members are concerned about what occurs on liquidation, that forms part of the usual way of dealing with liabilities in a liquidation, as many of them will know from their professional experience. That is the way that we intend to proceed on that matter.
 To consider the matter in totality, although we accept that the area is complex, I think that the rules are fair and simple.

John Burnett: I sincerely hope that the Chief Secretary will address the two points that I raised in an intervention earlier on the trigger date for an evaluation, which was also raised by the hon. Member for Hertford and Stortford. That is a very important point for taxpayers. My other point concerned when tax had been paid and agreed, and the consideration had been ascertained. If the values were so incredibly different, would there be a right to revisit the valuation?

John McWilliam: Order. I thank the hon. Member for Torridge and West Devon for bringing us back to the clause we are actually debating. We have been somewhat wide of it of late.

Paul Boateng: I am grateful to you, Mr. McWilliam. On the point of the hon. Member for Billericay about clause 90 and allowing deferred payments more widely, the purchaser can always apply to defer the payment of tax if they meet the conditions. It would not be reasonable to allow that to happen automatically, as the purchaser has to show that the amount of payment is uncertain and has to work out when future payments will be due. Deferred payments are not available when the amount can be ascertained from the start if the sums have not yet been done. If we were to allow deferred payments in such instances, it would be only too easy to exploit the rule by not carrying out the calculation in the first place in order to pay the tax on easy payment terms. That would not be right.
 The hon. Member for Torridge and West Devon asked me about the right to have the valuation 
 revisited. When the consideration is ascertained, the taxpayer makes a new return. If the original payment was too high because of a high valuation, they will receive repayment with interest. That development applying to SDLT meets the point made by the hon. Gentleman, and I hope that he welcomes it. 
 On the date of the estimate, about which the hon. Gentleman is also concerned, it is not necessary to be prescriptive as long as it is made in time for the tax to be paid 30 days after the effective date of the transaction. That is how we intend to deal with the two points made by the hon. Gentleman.

John Burnett: What is important is that taxpayers, valuers and the district valuer know what the valuation date is. Economic circumstances change and the value of an asset may rise and fall during a year. Taxpayers and valuers want to know how the date for making the valuation, which fixes the tax, is ascertained.
 My second point concerned not just when values are agreed. If a contingent value is agreed and the tax is paid, or not paid because it is deferred, but there is, when the transaction unfolds some years later, a huge disparity between what had been agreed and what eventually turned out to be the true value, will there be a chance to revisit the valuation then?

Paul Boateng: I understand and respect the hon. Gentleman's professional acquaintanceship with those issues. He said that the legislation should provide the date on which a reasonable estimate should be made, but our view is that that is not necessary. The point that I urge on him is that as long as the estimate is made in time for the tax to be paid 30 days after the effective date of the transaction, it is unnecessary to be prescriptive about when the estimate is made. I understand that the hon. Gentleman may have a different view, but our view is that the effective date of the transaction will be 30 days before the tax is paid but that we need not say more than that. I am prepared to listen to the hon. Gentleman's points, but our view is that when the reasonable estimate is actually made is not important if it is in time for the return. That is how the judgment will be made on whether the return is due, as long as the estimate is made in time for the tax to be paid 30 days after the effective date of the transaction. That is our view. He clearly has a different one.

Mark Prisk: I am not sure that the Chief Secretary's answer has given any great assurance. Indeed, it may cause greater consternation in the marketplace. As the hon. Member for Torridge and West Devon has said, and as I know from being a non-practising chartered surveyor, the date is critical. I hope that the Chief Secretary will respond positively when I say that this is a crucial area in which professionals will want much closer guidance. I hope that that guidance will come through the parallel consultation process, but I also hope that the Chief Secretary will be able to give us greater clarity on Report. Without that, significant problems could arise with the implementation of the clause.

Paul Boateng: I hear the hon. Gentleman, and I shall reflect on the points that he makes.
 We are asked to provide a date on which a reasonable estimate should be made. Our view is that it is not necessary to do so, as long as the estimate is made in time for the tax to be paid 30 days after the effective date of the transaction, but we do not need to be prescriptive about when it is made. We are urged, perhaps somewhat surprisingly, to be prescriptive, but our attitude is that the date when the estimate is made is obviously before the return is due. The date of valuation is the effective date of the transaction. That is the view that we have taken. If the hon. Member for Torridge and West Devon takes a different view, I should like to hear what it is.

John Burnett: Will the Chief Secretary define for us the effective date of the transaction?

Paul Boateng: I am not sure that it needs to be defined. I cannot give a hypothetical and generalised response to that. The effective date of the transaction is just that: it is the date when the transaction becomes effective. I simply urge the hon. Gentleman to look at the substance of the transaction and not its form. I go back to this tried and tested formula, which I am driven back to on occasions, because such questions open up a can of worms and a range of possibilities.
 We set out the effective date in the Bill in some detail, to enable the hon. Gentleman to judge from the transaction in question what the effective date is by applying the Bill to the substance of the transaction. Does that, Mr. McWilliam, help the hon. Gentleman?

John McWilliam: Order. Don't ask me. I have never heard metaphysics discussed in a Finance Bill before.

Paul Boateng: I wonder, Mr. McWilliam, whether that helps the hon. Gentleman.

John Burnett: Both Opposition parties represented here, and perhaps even the Welsh Nationalist party, will, as on other matters that have arisen in the debates on stamp duty land tax and in the Finance Bill, want to read Hansard to see exactly what the Chief Secretary has said. It may be that we will have to revisit this matter on Report.

Paul Boateng: I am only too happy for the matter to be revisited on Report. I will turn up, if the hon. Gentleman does, because these are important issues. I hope that when he reads what I have said in juxtaposition with the statute, the matter will be clearer than it has been this morning. We have canvassed at some length all the issues that have arisen in what has been an interesting debate. I hope that we can move on.
 When the hon. Member for Torridge and West Devon examines the legislation, he may find one aspect particularly helpful. I do not have a copy of the Bill to hand—

George Howarth: I have listened as a former humble engineer to this series of exchanges. What strikes me as fairly obvious is that the effective date of the transaction is the date on which whatever transaction is made comes into effect. I would imagine that that would be made
 clear in any documentation attached to any transaction.

Paul Boateng: My hon. Friend, with whom I have had the pleasure to share many happy hours in Queen Anne's Gate has once again gone straight to the heart of the matter—

John Burnett: He most certainly has not gone to the heart of the matter; the document can have many effects.

Paul Boateng: I did not meant to provoke that response. I was hoping to shed some peace and light. I refer the hon. Gentleman to clause 119, on the meaning of an effective date of a transaction. That is perhaps the most helpful aspect. Essentially, the effective date will be completion, substantial performance or special provision for options. That is the answer to his question; we got there, and I do not think one could be clearer than that. Having responded in that way, I hope that we can give the provision a fair wind and move on.

John McWilliam: I hope that when we come to clause 119, we do not have the same debate again.
 Question put and agreed to. 
 Clause 51 ordered to stand part of the Bill.

Clause 52 - Annuities etc: chargeable consideration limited to twelve years' payments

Question proposed, That the clause stand part of the Bill.

John McWilliam: I remind the Committee that this is a very narrow clause.

Mark Prisk: Thank you, Mr. McWilliam. I take note of your reminder.
 Following the copious response of the Chief Secretary—I am delighted to see that he has now been passed a fresh copy of the Bill to read during his quiet hours—I would refer simply to one point. In the previous debate, the Chief Secretary said that the 12-year rule on annuities that the clause relates to is fair. However, all of the experts' commentary that I have seen is contrary to that view. 
 Would the Chief Secretary explain the reasoning behind the 12-year cut off, given varying interest rates and inflation, and the impact those will have? Just how many of the 20 representative bodies involved in the consultation actually supported the rule in their submission?

Paul Boateng: I cannot answer the second question, but I shall certainly reflect on it and make the answer available when I have it. The hon. Gentleman asks why we have chosen to treat annuities in such a way. Payments may continue for a very long period, or even forever. It is impractical for payments to be made by instalment, or for provisions to be made for an adjustment that could come many years after the original transaction. The SDLT treatment will be similar to that already familiar to Committee members in existing stamp duty but it is, if anything more generous.
 Stamp duty used a 20-year period to calculate the charge for payments lasting 20 years or more in perpetuity, and a 12-year period for payments lasting for life. Under the SDLT the payment will be calculated using a 12-year period in every case. Is there a mismatch in terms of the 12-year period for annuities when we say that there is no discount for postponed consideration? The answer to that is no. The clause says that there is no discount for postponed consideration. For example, if one pays for land in instalments over 10 years, one cannot say that the value of a payment of £100 is worth £90 now, and use that as a basis for working out the SDLT due. The full amount of each instalment has to be taken into account, which also applies to annuities. The full value of each of the 12 payments has to be taken into account. 
 The rules provide a simple way to determine how much SDLT to pay at the outset. Our understanding is that the main users of the provision will be large life assurance companies. They appreciate such a simple, fixed rule, which can be administered efficiently for high volumes of transactions, and would rather have that than have to keep detailed records for each of the transactions, which would be the case if we were to adopt some different approach. That would not be desirable. 
 Making provision for adjustments would mean that adjustments could occur many years after the original purchase. One would have to keep records for all the intervening years, which would simply not make sense. Not only would the purchaser have to keep records, but the Revenue would have to do so. When dealing with perpetuities, it would be quite impossible to allow for adjustments for that sort of payment. I hope that when the hon. Gentleman reflects on it, he will recognise the wisdom of the approach in the clause. 
 Question put and agreed to. 
 Clause 52 ordered to stand part of the Bill.

Clause 53 - Demed market value where transaction involves connected company

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The clause provides for a new land tax to be charged on market value when a company purchases land from a person with whom the company is connected. That principle is already established in the existing Taxes Act. However, it would be helpful if the Chief Secretary would confirm one aspect. I am grateful to a number of outside legal experts, particularly the Law Society, for the following point.
 It is assumed that where the legal interest in property, but not the beneficial interest, is transferred in circumstances where clause 53(1) applies, the subject matter of the transaction will be the legal interest alone, which will have a nil or 
 nominal value, and accordingly no charge would arise. I would be grateful if the Chief Secretary would confirm that.

John Burnett: That is the point that I was going to make. It is important in relation to a situation where, to give one example of many, a new company has not been formed, but the land is purchased in Mr. or Mrs. Bloggs's name in his or her capacity as trustee, and in due course the legal estate is transferred to the company, which was always the intention. There is usually an underlying declaration of trust in such circumstances. Notwithstanding the absence of such a declaration of trust, when the legal estate and the land is eventually transferred to a limited liability company, or perhaps a limited liability partnership, will the Chief Secretary confirm that, as the hon. Member for Hertford and Stortford said, no liability to stamp duty land tax will arise?

John Baron: I seek clarification from the Chief Secretary on a similar issue. The clause appears to create yet another stealth tax, which will hit small businesses, especially those entrepreneurs who wish to incorporate land and buildings to transfer. The Chief Secretary will correct me if I am wrong, but because one can rest on contract, one could defer a charge on incorporation. Once deferred, for example, a company could sub-sell the property and only the end purchaser would pay the stamp duty. As a result of the Bill, however, resting on contract is no longer with us, and there is no way in which one can defer the SDLT on incorporation. In other words, it will have to be paid, whereas previously it could have been deferred and perhaps not paid at all for legitimate reasons.[Mr. Mark Hendrick in the Chair]

[Mr. Mark Hendrick in the Chair]
 I put it to the Chief Secretary that the change hurts small business entrepreneurs in particular. It appears that they will be hit by yet another stealth tax. On top of all the regulations that they have to endure, they will be given yet another burden at a particularly difficult point in the cycle. A number of entrepreneurs have raised that concern with me. Will the Chief Secretary clarify the point? It appears that there is an extra charge. The legitimate way of dealing with that and deferring it no longer exists; hence, a stealth tax is being created.

Paul Boateng: There is no merit in the hon. Gentleman seriously proposing that we should return to permitting the technique known as resting on contract. The whole point of the legislation is to remove such opportunities for avoidance. There is no new charge. There is no stamp duty relief for incorporation at present. A measure to ensure that stamp duty was charged on the market value of land transferred to a connected company was introduced in the Finance Act 2000.[Mr. John McWilliam in the Chair]

[Mr. John McWilliam in the Chair]
 This is an anti-avoidance measure. We could be talking about resting on contract, which it would be wrong to allow to return by the back door, or, in relation to the clause, a scheme commonly known as value shifting. That is the mischief that the clause was designed to prevent. We must ensure that the scheme 
 does not return in any shape or form. I reject completely the notion that the clause is designed to introduce a stealth tax. Nor do I accept that it unfairly catches small businesses, such as corner shops, that want to incorporate.

John Baron: Does the Chief Secretary accept that prior to the Bill there were perfectly legitimate reasons for deferring a charge on incorporation and that because of the Bill, and this clause in particular, those have been removed and SDLT will have to be paid on incorporation, come what may? In a small number of cases, that might be considered unfair.

Paul Boateng: I would be interested if the hon. Gentleman could give me some practical examples drawn from the world of small businesses and corner shops. That world recognises and welcomes the new £150,000 threshold for commercial property. It recognises that many businesses will be taken out of SDLT entirely when they incorporate. We estimate that that will apply to some two thirds of businesses that hold property. In addition, many small businesses do not hold property at all. Taking that into account, we estimate that more than 90 per cent. of businesses will be completely unaffected by the change when they incorporate.
 It is not necessary to over-egg the pudding. Hon. Members will find a ready ear when they raise genuine concerns about small and medium-sized enterprises, however they seek to raise their concerns. Many do, from all parties, and I am grateful to them, particularly those who, for reasons that are well understood, are obliged to remain silent in the course of our deliberations.

Mark Prisk: Obliged?

Paul Boateng: By usual form and practice.
 I say to Opposition Members, please do not lecture us on small and medium-sized enterprises. All members of the Committee have their interests at heart, and I suggest that the clause in no way imposes an unfair burden on them. 
 In response to the questions raised by the hon. Members for Torridge and West Devon and for Hertford and Stortford about the market value if a legal but not a beneficial interest is transferred, the market value is based on the nature of the interest transferred. If nominal, the market value will be nominal, and that is the end of the matter. I hope that that allays the concerns of the hon. Gentlemen. 
 Question put and agreed to. 
 Clause 53 ordered to stand part of the Bill.

Clause 54 - Exceptions from deemed market value rule

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The clause is about providing exemptions to clause 53. I have received several representations, predominantly from the legal profession, but I shall highlight just three. I am grateful to Charles Elphick of Reed Smith, the British
 Property Federation and the Law Society for giving me background on the matter.
 Could the Chief Secretary explain why bare trustees or nominee companies are absent from the exemptions? That is an important change in established law for such organisations. Could he define ''immediately'' in subsections (2) and (3)? I am not trying to engage in word play, but immediately is stretchable. Perhaps he could set some limit on it or explain why he has no wish to set a limit. 
 Lastly, subsection (4) states: 
''Case 3 is where—
(a) the vendor is a company and the transaction is, or is part of, a distribution of the assets of that company (whether or not in connection with its winding up)''.
 Could the Chief Secretary identify the circumstances in which the distribution of assets is not exempt?

Paul Boateng: Essentially, I am asked why case 4 has not been brought into SDLT. It is suggested that this would mean that the distribution out of a settlement would be charged SDLT at market value. My response is that there would be a charge based on market value only if the beneficiary who receives land is a company. The exception previously contained in case 4 could, and might well be, used to avoid the correct level of SDLT. If it was possible to transfer land into a settlement in favour of a corporate beneficiary, no SDLT would be charged on the transfer and settlement, and, if there was no consideration for the transfer, the exception could be used to transfer the land out of the settlement to a corporate beneficiary without SDLT being paid. That clear abuse of the rules would enable land to be passed through a settlement to a company without a charge to SDLT.
 By removing the exception, the SDLT rules close the loophole. It does not affect the transfer of land to a company acting as a nominee or a bare trustee for an individual. In that case, it would be the individual who is the purchaser, so the market value would not apply. I hope that that reassures those who raised the matter. 
 The exceptions in relation to nominees have been removed, because the exception in case 1 of the old stamp duty is no longer required as there is no charge to SDLT when a nominee transfers title to the person for whom they act. Cases 2 and 3 are also no longer required, because they were introduced to ensure that there was no market value charge when title was transferred to a nominee by a person they act for or between nominees. In such cases, the market value of a title will be minimal, and that goes back to a point made by the hon. Member for Torridge and West Devon. In all normal cases the market value will be below the SDLT threshold. When beneficial ownership and not just title is transferred to the nominee by the person they act for, it will be the same as any other transfer of interest in land, and there is no reason why the market value should not apply. 
 On the distribution of assets on a winding up, if the land was subject to a group relief claim in the three years preceding the distribution, it would not be exempt. That is one example but others may have 
 occurred to right hon. and hon. Members. With those explanations, I hope that we can now move on. 
 Question put and agreed to. 
 Clause 54 ordered to stand part of the Bill.

Clause 55 - Amount of tax chargeable: general

Question proposed, That the clause stand part of the Bill.

Mark Prisk: This clause is important and sets the amount of tax chargeable. I welcome the recognition that residential and non-residential markets are different. The old stamp duty lumps the two markets together with similar thresholds and rates, and it is fair to say that that fails to recognise the different characteristics and, for that matter, the different motives of vendors and purchasers involved in each market. The new tax distinguishes between the two and will operate different thresholds. I want to put on record our support for that. Sadly, however, that is where the good news ends.
 Part of the Government's modernisation agenda was to reflect modern commercial practice and, above all, we were told that the new tax would be based on fairness. It was reasonable to expect that the single most antiquated and unfair aspect of the old duty would be removed. What a great opportunity for the Government to sweep away what has become known as the slab effect. I shall explain that for the benefit of those who do not know what it means. 
 The slab effect means that a single rate applies to the whole purchase price. Thus, a couple buying a home in London for £250,000 would be liable for 1 per cent. tax, which would be £2,500. If the price were £1 more, the tax would be £7,500—a threefold increase in the tax burden. That iniquity is repeated at each threshold: £60,000, £250,000 and £500,000. The slab effect is grossly unfair and creates significant distortions in the marketplace. The hon. Member for Wolverhampton, South-West (Rob Marris) seems to agree. Such jumps in tax liability encourage tax avoidance. The Committee will be familiar with stories of people who have transferred curtains and carpets for large amounts of money unrelated to their genuine value. The danger is that retaining the slab effect generates tax avoidance.

George Osborne: My hon. Friend makes an important point about the distortions that arise in the housing market. The whole country saw how that happened with some flats in Bristol last year. Does my hon. Friend agree that many of the distortions have arisen because of the big increase in stamp duty since the Government came to power? Much of the avoidance of stamp duty that the Government have tried to cut out would not have happened if they had not increased stamp duty from 1 per cent. four years ago to 4 per cent. today for the highest rate. They continue to set that rate in stone.

Mark Prisk: I am grateful to my hon. Friend for that point. He is right. We have seen four increases in
 stamp duty in six years. There has been a rise of £718 million, or thereabouts, in tax revenue or stamp duty, and now the figure is about £4 billion from this tax, on which the Government rely. That is a significant increase. Whatever the Chief Secretary may feel, it has naturally helped to drive and encourage much of the tax avoidance that he bemoans.

Adam Price: Does the hon. Gentleman accept that at least the changes have had some beneficial effect in damping down an over-exuberant property market?

Mark Prisk: I do not share that view. One of the worries is that, while it is perfectly reasonable for changes to be made, if they are made in a way that the vast majority regard as grossly unfair—I referred earlier to the trebling of tax simply by paying £1 more on a certain purchase—that merely encourages more avoidance activity. Governments must get the balance right, and in this instance I believe that the Government have got it wrong. I shall give way out of equity.

Rob Marris: I note that the hon. Gentleman has not tabled an amendment to the clause. Why not?

Mark Prisk: We are now an hour and a half into this debate and, much as I would be tempted to add another element, I am keen, as the hon. Gentleman will know, to make quick progress.
 The Chief Secretary has spoken of his genuine commitment to tackling tax avoidance, so why does he leave the single most important promoter of tax avoidance in the new measure? If any members of the Committee are in any doubt about the slab effect—it appears that one or two might be—I draw their attention to the view of the Council of Mortgage Lenders, which has considered this matter in great detail and recently published an excellent study on it entitled ''Residential stamp duty: time for a change''. That is a phrase that I hope we will come back to in the next couple of years. 
 The Council of Mortgage Lenders says that the slab effect—the single rate—reduces efficiency in the economy by distorting relative house prices and by influencing the mobility of labour. It says that it creates incentives for tax avoidance, that, due to fiscal drag, it is not transparent, that it has distributional effects between locations and household types and that it acts in contradiction to a number of other taxes and the Government's goal of modernisation. Therefore, it is clear that the slab effect is antiquated, unfair and promotes tax avoidance, so what reason can there be for writing it back into the new tax in the clause? 
 I hope that the Chief Secretary will be able to answer those points, because, by retaining a deeply unfair rate structure, he undermines every other statement that he makes when claiming to reform and modernise the old duty. 
 The second concern relates to the starting threshold for non-residential property. As I said at the beginning, I welcome the distinction between residential and non-residential. Members of the Committee will know that the non-residential 
 threshold has now been set at £150,000. However, I have listened to representatives from many small businesses, of which the Chief Secretary is fond, and to their advisers, and the overwhelming view is that the threshold is too low. 
 The Government's partial impact regulatory assessment claims that the measure will help many small businesses, yet the London chamber of commerce has said that 95 per cent. or more of businesses in the capital will be hit, which directly contradicts the Government's own evidence. Will the Chief Secretary tell us exactly how many non-residential properties will be caught by the tax and what proportion of change that represents from the old duty? How many will be worse off? 
 What proportion of commercial land transactions will be liable for the new tax and how many will be worse off? Will the Chief Secretary confirm that next year, as set out in the Red Book, the Revenue intend to net an additional £350 million tax from stamp duty modernisation, rising to £450 million in the year thereafter? 
 Many experts in law, surveying and taxation are beginning to suspect that this new land tax has more to do with tax revenue and the Chancellor's desperate need to find some than with tax reform.

George Osborne: I do not believe it.

Mark Prisk: I know that my hon. Friend finds that difficult to believe, but I encourage him to realise that the Government are not always entirely honest with us about their motives. I believe that the measure has as much to do with tax revenue as with tax reform. Given that this is an antiquated, out-of-date and unfair measure, we are minded to vote against the clause, though naturally we are interested to hear what the Chief Secretary has to say.

John Burnett: I hope that the Chief Secretary will give members of the Committee an accurate description of the disparities between the present tax charged and the tax proposed in the clause. What studies have been undertaken? A regulatory impact assessment has been done. What additional revenue does the Inland Revenue estimate it will raise through the new tax? Why has the provision been included and why have the changes been proposed?

Michael Jack: I want to follow the same line of inquiry as the hon. Member for Torridge and West Devon. If the Chief Secretary has been doing his job properly, he will, before agreeing that the clause should stand part of the Bill in its present form, have probed with assiduousness and thoroughness the construction of the tax under consideration. During my time in the Treasury it was always quite an entertaining voyage of discovery to ask one's officials why the numbers were those presented. I am sure that the Chief Secretary, who is a man with an inquiring mind and of considerable intellect, will have wanted to satisfy himself that the structure of the tax is the correct structure.
 Therefore, my first question to the Chief Secretary is whether any alternatives were considered. If so, what were they and why were they rejected? Clearly the Bill 
 replicates the status quo, which is an interesting way of modernising something. I put the same question about the non-residential part in table B. For the record, I think that people would like to know how the parts of the clause were determined. A representation that I received from the British Retail Consortium makes the interesting arithmetic point that if somebody were to purchase a property worth £500,001, the stamp duty would be £20,000, but on an interest in land under the terms of a lease, the same value transaction affected by the net present value calculation would incur £5,000 lease duty. That is an interesting observation, because somebody setting up a business must decide whether they can afford the up-front charge of £20,000 or whether they should postpone the evil day and go for the £5,000 charge. That has an economic consequence for our hypothetical business, but in the real world embryo businesses may well have to make such decisions. 
 I appreciate that the Chief Secretary has put before the Committee the exemptions that the Government have made in respect of start-up businesses, but not everyone can take advantage of those. It is an interesting commentary, because the structure of the tax, which is largely reflected in the clause, was proposed partly in pursuit of anti-avoidance measures and to deal with people trying to manipulate the property market for their advantage. My example shows that that manipulation is questionable. One of the arguments was that if someone had a long enough lease they could walk round the effects of their tax obligations by the averaging process under the old arrangements. My example questions that assumption. I hope that the Chief Secretary will be able to oblige us with an explanation. 
 I am concerned about what I call the cliff-edge approach. Interestingly, although I do not personally subscribe to this approach, the Government's tapered arrangements for capital gains tax involved a ski-slope of gentle gradations over time for the reduction of capital gains tax rates. In the world of capital gains, they did not want a cliff-edge approach, but now in the world of property, they do. 
 I want to know whether the Chief Secretary and his advisers considered alternatives, because there are some in the world of law and property who would argue that some general annual low rate property tax might have been an administratively much easier alternative than the enormous complexity that we are grinding our way through in this series of clauses. There are complexities that could have been avoided with other constructs. Perhaps the Chief Secretary will tell us why the Government have decided that a replication of the structure of an old tax and the creation of a new tax, as set out in the clause, is in their judgment the best way to extract money from transactions and interests in land, rather than any alternative. 
 Sadly, we are not able to discuss in this Committee the formula that lies behind the calculation of the real world lease payments. The formula is complicated. I would be interested to know whether the Chief 
 Secretary, in determining the numbers in the clause and in calculating what the non-residential tax is supposed to be, has sat down and worked out a real world example to see whether more mortal beings can cope with the mathematics of working out their future liabilities under the numbers imposed. If we are looking for clarity and modernisation, the formula that lies behind the calculation of the real tax payable under the clause is, to say the least, an added complexity. 
 I want to press the Chief Secretary on a matter that other colleagues and I have raised with him: the breakdown of the £450 million extra tax that is posted as the first-year effect. I gave a breakdown of four categories earlier in the Committee's considerations, and I hoped that the Chief Secretary would be able to provide some numbers. The Committee is entitled to know on behalf of taxpayers—at the end of the day, it is their money—how the £450 million is accounted for. As I understand it, part of it is accounted for by what the Government thought was going to be the yield from tackling the special purpose vehicles constructed to avoid the effects of the clause. However, the Government have shied away from that. The Chief Secretary will know, from his discussions with Revenue officials, that they backed off because it was too complicated, but the Government posted their figure of £450 million: a number for the yield that they thought they would get. I conjecture that one of the reasons why the Government have not accepted our view that more time should be allowed before the matters are implemented is simply because, having posted £450 million as the net gain, they have to find some way of getting that money. Events have assisted them to continue with that figure, but the Committee should be told the breakdown of the tax components that are part of that commitment.

Rob Marris: May I point out to the right hon. Gentleman that the yield for this financial year of 2003–04, according to table A2, is £140 million, not £450 million?

Michael Jack: I do not entirely accept that because I would need to get out my Red Book from last year to confirm my figure. If I am wrong, I apologise to the Committee, but it is a net gain in revenue none the less, and my question still applies.

Mark Prisk: I happen to have the Red Book tucked away for quiet reading. Although the hon. Member for Wolverhampton, South-West mentioned this year, my right hon. Friend the Member for Fylde is referring to the figure for next year—£350 million, which will rise to £450 million after that. Does that help?

Michael Jack: My hon. Friend has done me a great service in updating my memory banks on the numbers involved. The general point is still well made that the Committee and taxpayers are owed a detailed explanation as to how those numbers are to be achieved. I look forward to the answers to each of the questions that I have posed. I am sure that the Chief Secretary with his usual courtesy and assiduousness will supply the answers.

Jonathan Djanogly: As my hon. Friend the Member for Hertford and Stortford said, it is important in relation to the quantification to go back to the Government's original consultation on stamp duty and look at the three criteria, which raise key questions. The first was that the Government want to help e-business, but in this case that is pretty much an irrelevance. I cannot see many people who want to sell their homes being much concerned about the effect of e-business one way or the other, so I shall avoid that.
 The second question posed in the consultation document was that of modernisation, which is a key issue. It was discussed at some length by my hon. Friend. The Government's idea was to set up a modern legal framework, but that is clearly not the case in the provision. In some ways, by taking an old tax and matching different bands, we have regressed in the modernisation process. That particularly applies to the £250,000 level, where the extra £1 leads to an increase from 1 per cent. to 3 per cent., which has hit many residential property buyers and sellers very hard indeed. 
 Those issues having been discussed, I would like to consider the third element of the Government's consultation document more carefully, which is fairness. Is the tax being applied in a fair way? The Government are considering such factors as the ability of people to avoid the tax. Whenever the question of fairness has come up the Chief Secretary has rightly spoken about the need to do what is fair for the mass of the population—that is the phrase he has consistently used. If we look at the residential aspect of the tax, we are talking about the mass of the population. About 70 per cent. of the population own their own home, so stamp duty is relevant for the mass of the population, and perhaps more so than any other element of the Bill that we have debated so far. 
 The rates are not fair because they penalise those in the south of the country where property prices are higher. It is the people in the south who are losing out to the greatest extent. It is a tax on success because it increases in its penal effect as people move up the property ladder. That is unfair, and particularly unfair on young people.

Meg Munn: Does the hon. Gentleman accept that when people buy property they take account of the whole cost, including legal fees and stamp duty? Stamp duty probably keeps the price of property in the south down.

Jonathan Djanogly: I thank the hon. Lady for making that point and will give two responses. First, to say that people might not want to buy property because of stamp duty is simply to ignore human nature. People want to trade up their property, and the fact that they live in the south does not mean that they will not want to do that because of a particular rate of tax. They will want to move up and are being penalised for where they live.
 Secondly, the hon. Lady reminds me of a point that I was not going to make. The Government are scrapping stamp duty on property transactions in some areas of the country, the vast majority of which 
 are in the north, so the impact on people who want to move is doubled. 
 I want to examine more closely the implication of the tax on the south. Homes in the north are, in general—my hon. Friend the Member for Tatton may disagree—significantly cheaper. Not only are they cheaper, there are tens of thousands of empty homes in the north, and that simply does not happen in the south. There is much greater elasticity of markets in the north, and I believe that we are seeing a crude attempt by the Government to discourage people from moving to the south. The hon. Member for Sheffield, Heeley (Ms Munn) touched on that in her intervention.

Adam Price: Does the hon. Gentleman agree that the greatest impediment to mobility between the north and the south is the lack of social housing in the south? It was his party that did so much to destroy the social housing sector.

John McWilliam: Order. We are dealing with specific taxes. That does not include social housing.

Jonathan Djanogly: Indeed, Mr. McWilliam. I thank you for bringing that up.
 The implication of the changes is that the Government are attempting through cumulative stamp duty to persuade people to stay in the north rather than moving to the south. That is being done not by helping those in the north, but by penalising those in the south.

Rob Marris: Has the hon. Gentleman heard of London weighting?

Michael Jack: People are waiting to get into London housing.

Jonathan Djanogly: I thank my right hon. Friend for his comment. I cannot add to it.
 The Government are using stamp duty as an alternative to an effective regional policy. I could ask whether anyone can suggest that the Government have an effective regional policy, but I am not going there, Mr. McWilliam. Having failed is bad enough, but the provision is so insidious because people like my constituents in Huntingdon are suffering enormous strains because of a 10 per cent. increase in population over the past 10 years. They are suffering the implications of the Government's failed policy.

Stephen O'Brien: I have listened carefully to my hon. Friend's argument and the various interventions. It may help the Committee to know that my constituency has valuable properties similar to those in Tatton, but three wards in Winsford, which is socially challenged, contain only property that is now exempt from stamp duty. The interesting aspect is that the pricing of properties—this is relevant to the intervention of the hon. Member for Sheffield, Heeley—has nothing to do with the expected rate of tax to be applied. It is purely a market function. Therefore, stamp duty is unlikely to deter the rise in house prices, which was the hon. Lady's point. It is simply an add-on cost of mobility and the ability to provide for oneself.

Jonathan Djanogly: I thank my hon. Friend for that helpful contribution, with which I absolutely agree.
 If stamp duty were thought to have any effect on encouraging people to live in certain parts of the country, either by penalising those in the south or by supposedly helping those in the north through exempting the parts of the country where prices are depressed, we have now confirmed that that is not the case.

George Osborne: I shall not follow the line of argument pursued by my hon. Friend.

John McWilliam: Order. I do hope that the hon. Gentleman will not. The argument has been well flogged.

George Osborne: The only empty properties in my constituency are those occupied by Manchester United footballers, who are not always there. They vote in the constituency, and often vote the right way, I am glad to say, except for the manager of Manchester United, who regularly turns up with my Labour opponent and tries to get him some publicity.
 Clause 55 enshrines the stamp duty tax increases of recent years, which are part of my personal memories. At the time of the 1998 Budget, I was getting married and buying a new house. I watched the Chancellor of the Exchequer from the Under Gallery, not then being a Member of the House, and I heard him increase stamp duty. I had to rush out of the Under Gallery to complete my house purchase that day in order to avoid the large increase in stamp duty that the Chancellor of the Exchequer had just announced.

John Burnett: I should be interested to hear a little more about that transaction. Presumably, there was a contractual completion date, which the hon. Gentleman brought forward. Did he have to pay the vendor for that privilege?

John McWilliam: Order. We have heard enough, and I would be obliged if the hon. Gentleman did not follow that line of questioning.

George Osborne: The answer to the question is that I did not. Of course, I had not expected the increase, because I believed the Labour party when it said that it would not increase taxes. Like many home owners, I was caught completely unaware by the increase. I made the mistake of believing the Labour party.

George Howarth: Has the hon. Gentleman heard the expression, ''When you're in a hole, stop digging''?

George Osborne: I am not in a hole. It is a wonderful house. It is in a vale, but it is not in a hole.
 You will be glad to know, Mr. McWilliam, that I have four specific questions on clause 55. First, what evidence does the Treasury have for the distorting impact of the slab effect? I would be interested to know whether the Treasury has done a study on whether there has been distortion in the housing market and whether there is, for example, a particular concentration of house prices around certain price bands to avoid the arbitrary limits set out in clause 55. 
 Secondly, I would be interested to know whether stamp duty has been an effective way of dampening 
 the housing market, as suggested by several members of the Committee. I am not sure whether it is a specific intention of the Government to use stamp duty to dampen the housing market and, if so, whether it has had that effect. I remember that the first stamp duty increases were immediately preceded by one of the biggest property booms this country has ever known. 
 Thirdly, I would like to know whether the Treasury accepts the point made by a number of people who have made representations to the Committee, including the Royal Institution of Chartered Surveyors, that it has led to what the Chief Secretary has called tax avoidance. Much of what we have discussed under the clause and during the entire debate on stamp duty land tax has dealt with the question of whether that avoidance has stemmed from the fourfold increase in the top rate of stamp duty. 
 Finally, I have a question for the Chief Secretary. As a guardian of the interests of the Inland Revenue, does he approve of prospective purchasers who buy property—for example a flat in Bristol, or property developers who buy several flats in Bristol—who use what can only be described as avoidance measures by spending large sums of money on fixtures and fittings in order to bring the price of a flat below a certain level so that they pay a lower rate of stamp duty? Is that something of which the Chief Secretary, wearing his official hat as guardian of the Inland Revenue, approves?

Paul Boateng: Well, well, well. This has been the most wide-ranging debate.

John McWilliam: Order. I have done my best.

Paul Boateng: We could not ask for more, Mr. McWilliam. We have had some real insights into the lifestyle of Conservative Members. We have had some intriguing personal disclosures in relation to their financial arrangements. We have traversed the vales of Tatton. I am intrigued by this vale in Tatton, within which the hon. Gentleman lives. I think that we should go there. I see very good reason, Mr. McWilliam, for you to exercise your discretion and advise us all to adjourn to his vale.

John McWilliam: Order. I have no such power, although I went to Winsford once.

Paul Boateng: I think that we should find out more.

Mark Hendrick: Does my right hon. Friend the Chief Secretary think that we should move to Tatton in order to lower the house prices?

Paul Boateng: I am sure that the presence of my hon. Friend would not have that effect. Who knows?

George Howarth: I should like to enlighten my right hon. Friend. Although the hon. Member for Tatton clearly lives in a vale, he is a frequent and most welcome visitor to Liverpool.

Paul Boateng: Quite so. It is the capital of culture.

John McWilliam: Order. That is a sore subject.

Paul Boateng: Among so many other worthy contenders.
 This has been a very interesting debate, but I feel that I must draw it back to the substance of our discussions. Clause 55 sets out the main rate charge for stamp duty land tax—the rate that will apply for implementation. In all respects, it is the same as the existing charge under stamp duty, except that we propose to increase the zero rate threshold for commercial and mixed use property to £150,000. Listening to hon. Members opposite, one would have thought that we had visited Armageddon on an unsuspecting property market. I think the hon. Member for Hertford and Stortford used the word iniquity. If that iniquity exists, it was not ever addressed while Conservative Members had stewardship of such matters. It sits rather ill that they should traduce us, and call into question our motives in relation to a charge that they did not seek to rectify when they had the opportunity to do so.

John McWilliam: Order. Before I adjourn the Committee can I remind those hon. Members affected that there will be a Programming Sub-Committee at 8.50 am on Tuesday.
 It being twenty-five minutes past Eleven o'clock The Chairman adjourned the Committee, without Question put, pursuant to the Standing Order. 
 Adjourned till Tuesday 10 June at five minutes to Nine o'clock.